Matap Embaku of Mainland Holdings coffee company

Matap Embaku, Chairman of Mainland Holdings Ltd., represents his own business group in the Morobe Province of Papua New Guinea. Mainland Holdings is owned by rural co-operatives consisting mainly of coffee growers.

Working co-operatively for coffee

Before the colonial era, the majority of people in Papua New Guinea (PNG) were subsistence farmers. During colonisation, the cash economy was introduced and people were asked to grow coffee, cocoa, or rubber. The indigenous people were encouraged to form co-operatives, a system that has been maintained for selling our products. Coffee is now the country's major agricultural export, although PNG is not well acknowledged as a major coffee producer.

Coffee is also a major cash crop for our communities, providing funds for school fees and processed foodstuffs in addition to the products obtained through subsistence farming. We also plant vanilla amongst the coffee gardens.

Although based in the South Pacific, I think we have valuable experience to share with others, especially in other developing countries. Business success depends upon good, honest management. In PNG, all farmers own their land, and all of our coffee farmers are shareholders in the business. We have 14 business groups and up to 40,000 small coffee farmers within those groups who collectively own Mainland Holdings. In fact, every one of us is a farmer; we plant coffee, pick coffee and sell it to our co-operatives. As directors, we represent the groups and our responsibility is to make sure that the company is profitable so that the benefits can be shared with our farmer shareholders.

One voice

I think the good thing about co-operatives is that people come together. If you go along as an individual and try to sell, you might never get a good price for your produce. But if you work together with one voice and elect your leaders, you can fight for what is best for the growers. What has been important for us is the strong sense of identity of the smallholders as owners of Mainland Holdings. We believe that sound management coupled with external professional support is a very important factor in the success of our enterprise.

Because we are competing with other coffee-producing countries, such as those in Africa and the Caribbean, prices for our coffee fluctuate. But, because we now own our coffee exporting company, we are closer to the end customer and are better able to appreciate the forces that impact on prices. Mainland Holdings recently invested in the acquisition of a large coffee exporter in PNG whose European customers were keen to meet with representatives of the business as they were unsure of working with so many small co-operatives. However, we were able to assure the importers that the quality and continuity of our exports will be maintained.

Road to success

Farmers are, however, not helped by the poor road infrastructure in rural areas. Transporting coffee from our highland villages down to the main towns for export is one of our major problems. If the government could recognise the hardships that we face in the rural areas and upgrade the roads, our buyers could go out and buy directly from the farms and take the coffee to the processing plants. Instead, most growers carry coffee on their shoulders to a point close to the main road for buyers to collect. It is hard work but people have to supply coffee to their co-operatives if they are to maintain the market with overseas buyers. I think our future would look better if the roads were upgraded by the government, but, based on past experience, such improvements are unpredictable.

The Board of Directors recently travelled to Uganda to visit smallholders in coffee and vanilla growing. In Uganda, we observed certain similarities in their smallholder organisations. For example, success of a co-operative is likely to be much greater where strong links are formed with the downstream processing. We noticed this in coffee production, where some co-operatives in Uganda had come together to own a mill, similar to Mainland Holdings. We also noticed this in vanilla production, where Uganda practices a centralised curing process, which encourages smallholders to produce greater quantities of higher quality vanilla.

Standards

Importers, especially in the European Union, require that we adhere to very strict standards for our coffee. We have factory managers and extension officers to provide advice but people are not always able to understand what they say. Sometimes these people want to produce in their own way but this leads to failure in maintaining the required standards. My advice is that growers should really look at quality as a priority. In my country, government organisations lack extension officers and those we do have rarely go right down to village level. But in the private sector, the company itself wants good quality produce to make a profit, so they have to go right down to the village level to get it.

We have to tell farmers "This is the kind of coffee we will buy. If you do not sell us coffee of the right quality, it will be rejected and you can take it back home." This is why the quality control department in our exporting subsidiary is so important. This department speaks both with the farmers and with the end customers. It provides the link between the coffee tree and the coffee cup.